What Is Meant By NGO In India?

29 Nov 2015

NGOs are nonprofit government organizations formed for a purpose of cultural, religious, social motive and are registered under the Central Government.

NGOs in India cannot be started by any person and the profits so earned through this organization cannot be distributed as dividends the profits so earned from the economic activities can only be utilized, spent or reinvested in nonprofit activities.

Usually, the revenue earned through these government organizations are in the form of non-tax revenue like membership fees, donations, funding grants, through different sources of interest and from dividends on investments.

The NGOs in India can be of the following types:

Registered societies

The NGO registration can be done through Societies Registration Act, 1860. This Act is adopted by almost all the states in India for the formation of state level NGOs. In accordance to this act, a society can be registered as a NGO with seven persons subscribing to the Memorandum of Association. This Memorandum of Association entails the name of the society, name of members, the objective of the society, address of the members and their occupations are also to be mentioned etc.

Public Trust

Public Trusts are created for the sole purposes of charity. There is no particular act that is followed all over India to get public trusts to set up. Some states enact the Public Charitable Trust Act while others do not follow any of the trust acts. An NGO cannot be created without a public trust act. States in India like Madhya Pradesh and Rajasthan have their independent public trust act while states like Bihar, Jharkhand and west Bengal don’t.

A Public Trust has to be registered under a single state but can be operated within any number of states.

Private Trust

A Private Trust is created and governed under the Indian Trusts Act, 1882. They are aimed at managing trust property of assigned people for religious or private purpose. Private trusts are exempted from the tax benefits available to the Public Trusts.

Nonprofit companies

According to the companies Act, 2013 section 8, nonprofit companies are associations given corporate personalities that are created for the cultural and charitable purposes. This act exempts such associations to go through the cumbersome registration and operational requirements required to be fulfilled before starting a company. This is the noteworthy feature added to such non profit companies through the new companies act.